PEST Analysis of Egypt

Egypt, is a transcontinental country spanning the northeast corner of Africa and southwest corner of Asia, via a land
bridge formed by the Sinai Peninsula. Most of its territory of 390,000 square miles lies within the Nile Valley of North
Africa and is bordered by the Mediterranean Sea to the north, the Gaza Strip and Israel to the northeast, the Gulf of
Aqaba to the east, the Red Sea to the east and south, Sudan to the south and Libya to the west. With over 84 million
inhabitants, Egypt is one of the most populous countries in Africa and the Middle East, and the 15th most populated
in the world. The large regions of the Sahara Desert, which constitute most of Egypt's territory, are sparsely inhabited.
About half of Egypt's residents live in urban areas, with most spread across the densely populated centers of greater
Cairo, Alexandria and other major cities in the Nile Delta.

Key Features and benefits of Egypt

Understand how Egypt can be used to plan business investments or market entry through a holistic view of

the country.
Gain an understanding of the political situation in Egypt, including key figures in the country and governance

indicators.
Understand customer demographics in Egypt through analysis of income distribution and the rural-urban
split, as well as healthcare and education.

Egypt Country Information (Source: OECD)

Population

80.72 million (2012)

GDP

$262.8 billion (2012)

Improved Water Sources

99%

Life Expectancy

71

Income Level

Lower Middle

Political environment
The Egyptian Constitution provides for a strong executive. Authority is vested in an
elected president who can appoint one or more vice presidents, a prime minister,
and a cabinet. The president's term runs for 6 years. Egypt's legislative body, the
People's Assembly, has 454 members, 444 popularly elected and 10 appointed by
the president. The constitution reserves 50% of the assembly seats for workers and
peasants. The assembly sits for a 5-year term but can be dissolved earlier by the
President. There also is a 264-member Shura, which is consultative, Council, in
which 88 members are appointed and 174 elected for 6-year terms. Below the
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national level, authority is exercised by and through governors and mayors

appointed by the central government and by popularly elected local councils. In
March 2007, Mubarak introduced several constitutional amendments that would
increase presidential powers and, more significantly, ban any political parties based
on religion, race, or ethnicity. The amendments were put to a popular referendum
and, despite low voter turnout and boycotts by opposition groups, passed with
75.9% approval. The external financial situation remains healthy amid the good
trend on foreign currency earnings and the increase in foreign direct investment
fuelled by the privatizations. Debt service is low and Egypt is building up foreign
exchange reserves. However, the fiscal deficit and public sector debt remain a
source of concern. Controlling public spending and reducing the debt necessitates a
spending overhaul that will take time. Regional conflicts and poverty have
strengthened Islamist opposition movements. In this context social climate is tense
and officials have exercised caution in pursuing reforms. The biggest and strongest
aspects and plans include:
The business climate has benefited from an active reform program and a regional
economic boom.
Egypt boasts diversified sources of foreign exchange (the Suez Canal, tourism,
private transfers, and oil and gas exports).
Foreign exchange reserves are high.
The country enjoys the political and financial support of Western countries.

Economical Environment
In the past year, the cabinet economic team has simplified and reduced tariffs and
taxes, improved the transparency of the national budget, revived stalled
privatizations of public enterprises and implemented economic legislation designed
to foster private sector-driven economic growth and improve Egypt's
competitiveness. Despite these achievements, the economy is still hampered by
government intervention, substantial subsidies for food, housing, and energy, and
bloated public sector payrolls. Moreover, the public sector still controls most heavy
industry. Tourism has become the single biggest foreign exchange earner. However,
there is some concern that current unrest will impact tourism. The interim
government announced an economic stimulus package amounting to $3.22 billion
in August 2013. In October 2013, it was increased to $4.27 billion. The international
economic downturn slowed Egypt's GDP growth to 4.5% in 2009, predominately
affecting export-oriented sectors, including manufacturing and tourism.
Unemployment is rising. In 2009 the government implemented a $2.7 billion
stimulus package favoring infrastructure projects and export subsidies, and is
considering up to $3.3 billion in additional stimulus spending in 2010 to mitigate the

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slowdown in economic growth. In September 2009 - Egypt was ranked among the
worlds 10 most active reformers for the fourth time. Egypt made business start-up
less costly, expedited the construction permit process, expanded the information
available from the private credit bureau, and created commercial courts to speed up
contract dispute settlements.

Social Environment
Egypts total population stood at approximately 80 million. Out of this approximately
90% are Muslims while the remaining are Christians. Most of the population inhabits
the area near the NileRiver and almost half of Egypts population is urban, living in
the densely populated cities such as Cairo and Alexandria. One of Egypts biggest
socio-economic problems is the high unemployment rate which has been growing
over the years. The unemployment rate, which has averaged more than 10% over a
decade, increased to over 12% in 200506. With the population growing at 1.8% per
annum, the economic growth of 4.4% is not enough to curb the unemployment rate.
While the average growth in employed population during the last five-year period
stood at 2.3%, the rise in unemployed population has been much higher during the
same period averaging around 8%. The high rates of unemployment and population
growth coupled with meager wages in most of the public sector companies
contribute to the poverty levels, with close to 20% of Egypts population below the
poverty line. A big challenge for Egypt in the near future will be to create jobs, as
the population within the 2045 age-group constitutes around 65% of the total
population. The education indicators of Egypt project a poor image of the education
system. Only about 58% of the population is literate and there is a big difference in
the literacy rates for males and females. Male literacy rate is around 68%, while
female literacy rate is just about 47%, indicative of gender disparity. The National
Council for Women, a nodal government agency that works for the welfare of
women in Egypt, aims to completely eradicate illiteracy among females.

Technological Environment
Egypt's IT spending is expected to increase from US$1.3bn in 2010 to US$2.1bn by
2014 and the Egyptian IT market growth is forecasted to remain below preeconomic crisis levels in 2010, but economic recovery, tenders delayed from 2009
and higher incomes boosted by pay raises for civil servants and other groups should
help to keep sales on an upwards trajectory. A number of policies have been
implemented to attract foreign investment in IT outsourcing, including local
employment subsidies, lower corporate taxes and deductions for training costs. The
Egyptian minister of state for administrative development has said that 200
government services will soon be available online through a new e-government
portal. The portal will offer 70 services in both English and Arabic. According to the
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Ministry for Administrative Development, more than 20 government agencies

currently offer services and licenses online. Egypt's computer hardware sales are
projected at US$821mn in 2010 and are forecast to reach around US$1.3bn in 2014.
Egypt's IT market will stay hardware dominated, with spending on PCs sustained by
initiatives like the 'Computer for Every Student' and 'PC for Every Home' programs.
Hardware accounted for an estimated 62% of Egypt's IT spending last year.
Households account for 20-25% of unit sales, with almost 1-1.5mn households said
to possess a computer at present. Overall spending on software remains rather low,
which reflects the relative immaturity of Egypt's IT market. One market driver has
been a significant fall in software piracy, with the illegal software usage rate, as
measured by the Business Software Association, falling a further 1% to 59% in
2008.

Future Trends in Egypt

While large corporations have long understood the business case for deploying
technology, small and medium-sized enterprises is increasingly beginning to see
such investments as important if they are to avoid being overtaken by more techcompetent competitors. In 2008, Egypt continued liberalization of the telecoms
market, with the award of a second national fixed license. This development, which
followed the award of 3G licenses to three mobile telecoms service providers in
2007, is likely to drive new opportunities for IT vendors. As well as generating
additional spending on IT products and services from the telecoms sector, the
spread of internet should provide a boost to the PC market over the next few years.
The Egyptian IT services market is dominated by demand from government, finance
and telecoms sectors, which account for more than 25% of Egypt's total spending.

Kenya

Kenya attracts a number of our clients, thanks to its strategic location at the heart of the
East African Community. Its increasing ties with China bode well for the countrys trade
and investment. Kenya is also allied with the US as part of the Horn of Africa region.
The countrys economy is broad-based, reducing its vulnerability to commodity price
shocks. Technology stands out as a rapidly growing sector in Kenya.
We keep our clients informed of the latest market moves and political developments as
part of our 'top-down' and 'bottom-up' perspective. Clients also benefit from in-depth
analysis on 15 of Kenyas most important industries. We provide interactive data and
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forecasting alongside detailed and risk-assessed analysis from our expert teams. We
aim to keep you ahead of the curve, so you can do business with ease in Kenya.

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